What is better for my ROI? CPM or CPC?

OK, you already know the “immediate difference” between a CPM advertising campaign and CPC advertising campaign.

CPM – Cost-Per-Mille, Mille is Latin for “thousand”. You pay per one thousand impressions of you ad.
CPC – Cost per click, you only pay when someone click on your ad.

You may or may not have actually deployed test campaigns to be sure as to which of these brilliant advertising models will work for your specific product.

Should you pay for for the impressions that your ad receives? Or, should you pay only for the click received?

That is the big question….

When it comes to pay-per-click advertising, there’s a lot of confusion about CPM versus CPC.

From an ad network point of view, here is how it works..

CPM — Premium Inventory, Premium Publishers, Premium Price.

This simply means, when you start a CPM model ad campaign with most of the first tier ad networks (Google, Yahoo!, Bing), your ad will be placed on premium high traffic sites (CNN, Yahoo!, Photobucket..etc) and you’ll be paying premium price for impressions.

CPC — The Realm of small publisher and direct marketer.

This means, your ads will display on smaller publishers’ websites, and you pay only for the clicks received. This may actually be a better choice if your product or service is in a smaller and focused niche.

What does this have to do with choosing which model will work for you?

The truth?

It depends on what the GOAL of your ppc advertising campaign is.

In short, if your product appeals to a smaller but enthusiastic niche; if you are looking to increase leads and revenue before popularity and market domination; then, CPC may be a better choice for you.

On the other hand, if your product appeals to a much larger audience; if your marketing goal is to gain popularity among the masses and become a leader in your market, then you may want to consider CPM model on major ad networks.

Here’s a breakdown of where both those scenarios fall.

When Is CPM Useful?

This is where being seen (ex. “brand exposure”) would fall.

If your main goal is to get in front of your market—not necessarily get clicks—then paying for impressions instead of clicks makes the most sense.

Plus, if you’re running a great ad that happens to get a lot of clicks, then you’ll end up getting more clicks for less money.

(Note: This is especially useful for promoting things that are “shocking”, controversial, or otherwise really full of curiosity that peaks prospects interest.)

When Is CPC Useful?

If you’re looking to generate qualified leads, then cost-per-click (CPC) is going to benefit you the most.

The catch?

You MUST have a funnel that’s been setup and proven to convert.

Ideally, you’ll be capturing information from a landing page before sending prospects on to what you’re promoting.

That way, even if they don’t convert immediately, you’ve given yourself the opportunity to continue following up.

Facebook Changes Everything.

Before Facebook came into the advertising game, CPM campaigns would cost you an “arm and a leg”, just because it’s running on Premium Sites.

Facebook targeting is different. You can reach a smaller niche and still pay per impressions, and it wont cost you much.

This means, that you can dominate your small niche using CPM campaigns and still pay lower in cost per click.

Still, you’ll need to test both models side by side and decide for yourself.

Do you have any pay-per-click campaigns running right now? What’s working for you? Please share..